February 2016


The first unanswered question is why did he do it?

Typically, a Minister of Finance does not release revised economic and fiscal projections that close to the budget.  Instead, revised status quo forecasts, along with detailed explanations of the revisions, are a major component of the budget. It would appear that the Minister wanted to put a damper on public expectations on what be expected in the budget. He may also have wanted to signal to his cabinet colleagues that they should also curtail their expectations for his first budget.

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Fiscal Monitor for April – November 2015

The federal government posted a surplus of $2.2 in December 2015, compared to a surplus of $2.4 billion in December 2014.  As a result, there was a surplus of $3.2 billion for the first nine months of 2015-16, compared to a deficit of $0.9 billion in the same period in 2014-15.

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Finance Minister Morneau and Prime Minister Trudeau have finally admitted that the upcoming deficit will exceed $10 billion and that the deficit will not be eliminated over the next four years. Deficit elimination is no longer a short-term fiscal target for the Liberal government, but a “long term” issue.


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In a recent Opinion Piece in the Globe and Mail, Ken Boessenkool, the former Chief of Staff to Stephen Harper, argued that a cut in the GST would satisfy most of “the design elements of an ideal stimulus package.to stimulate the economy”. He set out four design elements: timing, speed, target, and sustainability.

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Fiscal Warning Lights are Flashing

Finance Minister Bill Morneau is busy putting together his first budget. No date has been announced. First budgets, after an election, often don’t turn out well for Ministers of Finance. It is very hard to live up to election promises and escalating expectations. Mr. Martin faced a fiscal crisis in preparing his first budget, and high expectations that he would fix the problem. Despite some significant fiscal actions in the budget, they were seen as “inadequate” in resolving the fiscal crisis. In the 1995 budget, Mr. Martin made sure this would never happen again.

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